It's been a heady few hours for Bitcoin. The crypto currency was trading at around $500 at the time of writing, which is not a disaster, but off more than 50% from its late-2013 highs. More ominously, a document supposedly leaked by Mt. Gox, the Japan-based Bitcoin exchange, warns that "this could be the end of bitcoin." So what's going on?

Mt. Gox Crash

The Two-Bit Idiot, a well-known Bitcoin blogger, posted an update Monday night that purported to be a "Crisis Strategy Draft" from Mt. Gox. The document stated that because of a "transaction malleability" glitch, some 744,408 bitcoins — the equivalent of about $350 million — had gone missing. As Mt. Gox had previously explained, "a bug in the bitcoin software makes it possible for someone to use the bitcoin network to alter transaction details to make it seem like a sending of bitcoins to a bitcoin wallet did not occur when in fact it did occur." It's not clear whether outsiders took advantage of the flaw or if Mt. Gox was complicit. The company could not be reached for comment.

The shortfall is a potentially fatal blow to Mt. Gox. "The reality is that MtGox can go bankrupt at any moment, and certainly deserves to as a company," the note continued.

That Crisis Strategy Draft included the line: "At the risk of appearing hyperbolic, this could be the end of Bitcoin, at least for most of the public."

Representatives from Mt. Gox could not be reached for comment. The site wasn't working Tuesday morning.

According to the statement, the shutdown is intentional and will last for a month or so. Afterwards, Mt. Gox plans to emerge as a new company, rebranded as just "Gox."

According to this Reddit thread, Gox.com started directing users to MtGox.com shortly after the purported leak. Meanwhile, one user claims the source code on Mt. Gox's site makes a reference to an acquisition:

Other Exchanges

This tragic violation of the trust of users of Mt.Gox was the result of one company’s actions and does not reflect the resilience or value of bitcoin and the digital currency industry. There are hundreds of trustworthy and responsible companies involved in bitcoin. These companies will continue to build the future of money by making bitcoin more secure and easy to use for consumers and merchants. As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today. Mtgox has confirmed its issues in private discussions with other members of the bitcoin community.

What It Means for Bitcoin

It's unclear. The Mt. Gox document speculates that the alleged theft could set Bitcoin back five to 10 years with the general public. However, as noted, Bitcoin's price hasn't fallen off a cliff — yet. Meanwhile, GigaOmspeculates that the Winklevoss twins or other big-time Bitcoin investors might step in to halt the currency's freefall, "much like a central bank would do."

So far, that hasn't happened.

UPDATE: Feb. 25, 12:32 pm EST Mt. Gox's website is back. The company put up the following statement Tuesday morning:

Dear MtGox Customers,

In the event of recent news reports and the potential repercussions on MtGox's operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

Mashable
is a global, multi-platform media and entertainment company. Powered by its own proprietary technology, Mashable is the go-to source for tech, digital culture and entertainment content for its dedicated and influential audience around the globe.